Why IROs are responding to the changing ESG landscape
It’s often said that you know you are doing your job well when people start asking for advice from all different parts of the business. From the board and senior management down, you have become a vital resource on the company, the industry and the mood of the capital markets.
But how do you become a trusted adviser? In this report, senior IR experts offer advice on how IROs can make themselves indispensable to their firm and elevate their career to the next level.
Creating opportunities for impactThere’s no question that the IR department enjoys a unique position within an organization. With fingers in many pies, and eyes and ears that are always open and on the pulse externally and internally, IROs are ideally placed to have a tangible effect on the business and make a positive impression at all levels, both within the company and across the external stakeholder landscape. But amid the hustle and bustle of this busy and diverse function, how can IROs stand out and position themselves as vital trusted advisers?
IR teams typically have valuable intelligence gained through regular interaction with analysts and investors
For Shelly Patel, head of IR at Rathbones Group, securing the support of the senior management team and C-suite is key. ‘I believe one of the most important pillars for success in an IR function is to have senior management and board level buy-in,’ she says. ‘The more you can show leaders of a business the value of a successful IR function, the more likely you will become an invaluable resource.
‘This can involve gathering the intelligence management needs for solid decision-making, such as discussions you have with the external markets, competitors, investors and analysts – in short, it’s the information that will support the management team’s strategic thinking.’
To make a tangible impact and boost their profile, IROs need to make the most of every opportunity from every source to add value, according to Sandra Novakov, head of IR at Citigate Dewe Rogerson.
‘IR teams typically have valuable intelligence gained through regular interaction with analysts and investors, analysis of investor trading patterns, peer group benchmarking and perception studies,’ she says.
‘This positions IR professionals well to help shape company strategy, support operational initiatives and facilitate good corporate governance. The extent to which they leverage this opportunity will determine the quality of their relationships internally as well as the extent to which they are seen as a vital resource.
‘By sharing market intelligence with the board, senior management and heads of key business divisions, IR teams can aid decision-making and play a vital role in shaping the strategic direction of the group.
‘For example, being able to anticipate the likely market reaction to a potential transaction or a shift in strategic direction can determine how such initiatives are communicated to ensure optimal levels of support from the investment community. Not addressing investor concerns in such situations can have detrimental consequences.’
An external viewThis view is shared by Patel, who reinforces the point that effective IROs can provide a window on the thinking of the outside world.
‘Often, management is too focused on what’s going on internally and an external perspective is missing,’ she says. ‘IR should be the conduit for this. When anyone in the business wants to understand the market backdrop, what competitors are doing or what investors are thinking, you want them to think of the IR function as their greatest source of knowledge.
You want them to think of the IR function as their greatest source of knowledge
‘This helps to build trust with key senior stakeholders who are often incredibly busy day to day and are looking for someone they can turn to as a trusted subject matter expert.’
Resourceful IROs and teams can also play an important role in supporting good governance, says Novakov, whose company is, at times, mandated by company boards to investigate market perceptions regarding management performance in certain areas.
‘This allows the board of directors to take appropriate action to address any issues in a timely manner,’ she explains. ‘When it comes to supporting business heads, intelligence gathered through benchmarking research conducted by the IR team can be extremely useful when assessing changes in the competitive landscape and reviewing actions taken by competitors, including how these were received by the market.’
